The False Claims Act continues to make headlines. The DOJ announced earlier this year that its fiscal-year recoveries—across 351 settlements and judgments—exceeded $2.2 billion, which was the second-highest number of settlements recorded in a single year. More recently, the US Supreme Court heard oral argument and is poised to issue a decision in a closely-watched FCA case that could radically change the balance of power between the government and industry.
Given this heightened regulatory and judicial scrutiny, it is no surprise that insurance for FCA exposures also continues to develop. Just this month, the Seventh Circuit affirmed an Illinois federal court’s ruling that an insurer must pay $10 million to pay for its portion of a drugmaker’s settlement with the US Department of Justice, hopefully ending the yearslong battle for coverage.
In 2012, Astellas, a pharmaceutical company, launched a new drug to treat metastatic prostate cancer. That drug was only partially covered by Medicare. After the launch, Astellas donated $27 million to two organizations and encouraged the organizations to provide co-pay assistance. This arrangement caught the attention of regulators at the DOJ because federal anti-kickback statutes prohibit pharmaceutical companies from offering any money to induce Medicare beneficiaries to purchase that company’s drugs.
In 2016, the DOJ issued a subpoena to Astellas, beginning its investigation into alleged federal healthcare offenses. And in 2017, the...
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